The US dollar index is trading in the green,
having gained 0.06% from yesterday’s closing level. Fundamentals are in favor of the US currency
as strong macroeconomic data released this week downplays the recession risks in the
domestic economy. Today investors are absorbing US GDP data
for the third quarter. The USD/CAD is trading under higher volatility
as Canada also provided important data. Market participants are trading with caution. Popular currency pairs retreated from the
recent peaks. The euro/dollar pair failed to develop the
uptrend. The pound/dollar pair has survived a rough
week, having slumped after a record rally. Fears about a disorderly Brexit push the pound
sterling down at the year end. In this context, the US dollar has been advancing
against a basket of six major currencies. It is on track for the best week in a month. Apart from upbeat economic data, the greenback
has been supported by remarks of Fed officials who spoke in favor of the cautious approach
to interest rates. The US dollar index opened the New York trade
at 97.51. Among the market-moving reports from the US
today are data on private consumption and GDP for the third quarter. The revised gross domestic product matches
the second estimate. So, the US economy expanded 2.1% on a quarterly
basis. Today Canada reported on its retail sales. This metric is viewed as a barometer of consumer
sentiment and a leading indicator for the retail sector in the short term. A higher index is bullish for the Canadian
dollar while a lower index makes the loonie weaker. The consensus suggested an increase in retail
sales for October. However, analysts were wrong. Canada’s retail sales fell sharply 1.2%
month-on-month, thus making an annual rate decline by 0.6%. No wonder, the Canadian dollar is losing ground
versus its American rival. Following the downbeat data, the USD/CAD pair
was trading at near 1.3166. Earlier in the week, Canada released dismal
data on wholesale sales and manufacturing sales. Amid such feeble fundamentals, the loonie
could extend weakness, though some analysts foresee the loonie’s resilience against
the US dollar. As a commodity currency, the Canadian dollar
finds solid support from rising oil prices. Yesterday, WTI futures closed at the level
above 61 dollars a barrel for the first time in over three months. The main consumers of the Canadian crude are
China and the US. Progress in the trade talks encourages a rally
of oil prices and other commodities.

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